An affordable housing development

The QAP, which is short for Qualified Allocation Plan, is the document which lays out all of the guidelines for the submission of Low Income Housing Tax Credits (LIHTC). These tax credits can be a significant resource in the development of affordable housing, but the guidelines in the QAP must be followed religiously in order to receive them.   As such, developers read the QAP fervently making sure to meet its requirements to score as many points as possible, in as many categories as possible, so their applications may be one of the chosen.  But the QAP is more than just a list of requirements.  If one reads between the lines, you realize that the QAP ultimately deals with values. That is, each requirement and scoring criterion exists for a reason and represents State government’s preferences for development. Once you realize this fact, the key question evolves from “What do I need to do to get these tax credits?” to “What does my State government value, and how can I be more effective within this value system?” DCI maintains that spending time trying to answer this question and reflecting on the application process can streamline tax credit applications in the future and build capacity within the development firm itself.

Each State has its own QAP reflecting its own values, but a brief study of the Indiana QAP may help to illustrate our assertion. So what does the State of Indiana value, as revealed by its QAP? A few values stand out predominantly.

• · One key priority of the Indiana Housing and Community Development Authority (IHCDA) is to support comprehensive community development. This value is listed as both a top priority and a goal of IHCDA in the QAP.  This value is supported by application elements that offer extra points for infill development in existing neighborhoods, redeveloping brownfield sites,  promoting  neighborhood stabilization, inclusion in a local redevelopment plan, being in a federally-assisted revitalization award area, providing nearby off-site improvements or amenities and facility investments, having a strong tenant investment plan providing linkages between tenants and supportive services, entertainment, and engagement opportunities.   Additionally, 10% of the tax credit funds are set aside for developments that make a positive community impact by being part of a broader or comprehensive program of neighborhood improvement and having the capability to fundamentally change the character of a neighborhood. Developments that are part of a comprehensive phased development and show continued commitment to that neighborhood also receive extra points.  Finally, one of the Authority’s housing goals is to support developments that are located in Qualified Census Tracts and/or difficult to develop areas which can also provide additional points in your application.
• Another key priority of IHCDA is to support tenants with special housing needs, particularly the elderly, and to support aging in place. This priority is found throughout the QAP and is listed in the Authority’s housing goals, priorities, and requirements for a tenant investment plan.   (The entire third level of this tenant investment plan deals with community enhancement to encourage aging in place).  Another 10% of tax credit funds are set aside for developments providing 100% accessible or adaptable units dedicated to the elderly.
• A third preference of IHCDA is to support development that preserves existing low income housing or housing that minimizes the displacement of tenants. These elements offer extra points to developments that redevelop a vacant structure, support historic preservation, preserve existing affordable housing, provide an adaptive reuse to an existing structure, offer homeownership opportunities, or participate in preservation of community revitalization.  This is accomplished by;  1) being an infill development that conforms to an existing neighborhood;  2) having rehabilitation represent 75% of the development;  or 3) being included in a City or Town’s Revitalization Plan.  Another 20% of tax credit funds are set aside for developments that involve substantial rehabilitation of an existing structure.
• One final value of IHCDA is to support high performance building. This element  awards extra points for developments that employ high performance housing characteristics such as high energy efficiency, provide smart use training to tenants on  efficient use of resources and utilities, have building certifications such as LEED, or have other unique features.  Additionally, more points are given to developments with a high level of amenities. These can include entertainment-related amenities such as playgrounds or picnic areas, interior architectural amenities such as wooden floors, or security amenities such as well-lighted parking lots and restricted access. Finally, more points are given to developments that score the highest for inclusion of universal design features that maximize the accessibility in the development.

Comprehensive community development, opportunities for elderly housing and aging in place, preserving low income housing and minimizing displacement of existing tenants, and high performance building characteristics are the key values of the Indiana Housing and Community Development Authority.  These values work to achieve IHCDA’s ultimate objective, which is to increase the overall impact of tax credit development using the tools above. If IHCDA’s objective is reached, the tax credits will not only result in affordable housing but also in additional investment around that housing, forming a comprehensive neighborhood with services and opportunities for continuous engagement in the wider community.

There are many ways for us to include IHCDA’s development preferences in our developments and just as many submittal requirements in order to receive the points for them.  However, beyond the required maps, data, and narratives there exists a larger picture that can refine the long-term objectives of our development firms. That is, by embracing developments that are environmentally-friendly, community-centered, and committed to the long-term well-being of the neighborhood, we can move beyond thinking about what we need to do to finish the application and start thinking about how we need to do development in general. This change in philosophy can help us increase success with our IHCDA applications, our developments in general, and most importantly our communities.

The massive five-building complex used to house the National Design Factory, which served as the headquarters to the National Motor Vehicle Company. The National Motor Vehicle Company used to produce cars that were driven both by individuals and by racers in theIndianapolis500. After the car company went out of business, the factory sat vacant, but it certainly is not vacant now. Over the next few years, the warehouse will be the site of a redevelopment project focused on creating a unique live/work district featuring design-related businesses. Today, however, it serves as passive storage for organizations such as Habitat for Humanity.

The massive five-building complex used to house the National Design Factory, which served as the headquarters to the National Motor Vehicle Company. The National Motor Vehicle Company used to produce cars that were driven both by individuals and by racers in theIndianapolis500. After the car company went out of business, the factory sat vacant, but it certainly is not vacant now. Over the next few years, the warehouse will be the site of a redevelopment project focused on creating a unique live/work district featuring design-related businesses. Today, however, it serves as passive storage for organizations such as Habitat for Humanity.

As time has passed, there have been many interesting items stored in the warehouse. Following the closure of a Lone Star Steakhouse, the warehouse was filled with cowboy boots, saddles, and even cowboy boot lamps. Most of these ended up in the Habitat Reuse Store on East 22^nd Street. However, the most exciting new addition to the warehouse is a set of one of Indy’s most delicious food trucks.

DCI was recently approached to lease space by the West Coast Tacos trucks and instantly began brainstorming ideas that would turn wasted warehouse space into tasty meals. West Coast Tacos has a simple menu inspired by Asian cuisine. Some of their menu includes Chicken Teriyaki tacos, Spicy Chicken Tacos, Spicy Pork Tacos, and Spicy Beef Tacos, but they have large burritos as well. The taco trucks will be in the warehouse soon, and DCI is looking forward to having delicious food so close to the office.

Community revitalization serves as a theme for the project. The question “What makes a healthy community?” explores this theme and serves as an overall guide for learning and the development of the project. When asked about this question, children from Banks’ class were quick to reply that communities are healthy when there are healthy activities to do together, lots of trees and parks, good schools and jobs, and no boarded up houses. They said that healthy communities also have little pollution and lots of chemical-free fruits and vegetables available. When asked how the farm could help make their community healthier, the students replied that the farm will provide healthy, cheap food and give people a healthy activity to do.

Pressed plants from the farm

Children in Banks’ math class have been studying scale models and creating rectangular prisms in order to create models for how shipping containers could be turned into a development containing a greenhouse, a farm shed, and an outdoor classroom. The parameters of the students’ project require that they contain their conceptual development within a specific footprint and strive to produce minimal waste.  By the end of the school year, the class will draw their designs in Google Sketchup and create wooden models in a larger scale than the one they are currently using. To help them conceptualize the process, the class will meet with Ratio Architects, see site designs from Green Three LLC, and go see real shipping containers. Additionally, each Friday the class partners with younger students to go outside to the farm site to analyze plants and soils, learn about planting systems, and get to know each other through smaller projects and games. All of the children were excited to try the healthy foods they may grow in the garden, such as the (very popular) sugar snap peas.

Rectangular prisms model a shipping container arrangement

Overall, the urban farming project excites The Project School’s faculty and students alike, and students are eager to get to work actually growing the vegetables planned for the site. Students say they like the farm because it allows them to go outside and do more “real-world work” and to see the results of their labors. The farm has succeeded so far in bringing students together toward a common, healthy purpose and in teaching students the value of urban farms for community development. Although its impact on the rest of the community is yet to be realized, there is much reason to look forward to the project’s completion.

Partnering with The Project School has allowed DCI to broaden its reach within the Martindale on the Monon neighborhood and to explore opportunities for community development through collaborative, innovative thinking. The guiding principal behind DCI’s work is to foster community development through the improvement of both the physical landscape and the social networks built around it. It is for this reason that DCI has provided the land for the urban farm at no cost to The Project School, and we wish them the best of luck with their amazing project.

In addition to being a central site in the Martindale-on-the-Monon neighborhood’s redevelopment, the senior housing community will also be central to future plans for a Senior-Friendly Living District. This district will bring needed quality of life improvements to the area so that retiring seniors may “age in place,” avoiding displacement and isolation. By staying in their own communities rather than moving to senior housing far away, area residents will be able to live close to their families and life-long friends.

As the senior citizen population continues to grow in the area, keeping seniors connected to their communities is a mounting concern. Development Concepts is proactively addressing this concern by not only providing housing for the area’s senior citizens but also providing senior-centered community development, which takes into account seniors’ needs and pleasures both in the building and out in the community. Creating opportunities for seniors to volunteer, live, and play in the neighborhood that they have lived in most of their lives is a key piece of the overall development plan. As the neighborhood evolves to meet this vision, it will become a place that current residents will want to stay in as they age as well.

The senior housing community builds on developments centered in the National Design District, which include the National Apartments and The Project School, and will add yet another innovative project that will serve to further spur the area’s growth. The DCI Team has been working diligently on preparing plans for the development and is looking forward to the project’s implementation.

The DCI Team has finally returned from our three-day community design charrette in Goshen, Indiana.  Staff from DCI, Urban Collage, and Shrewsberry set up a mobile studio in Goshen to work with residents to develop a strategy for the re-development of the 9^th Street Corridor.

The community workshop on day one allowed the public to work creatively through a variety of “tasks” to help them envision the future development along the 9^th Street Corridor.  The Team took that information and began to draft a series of development scenarios for the Corridor, finishing just minutes before residents arrived for the final workshop.  Urban Collage did an amazing job and created amazing pieces that evoked excitement among all the participants.  Thanks for everyone’s hard work!  For more information about the 9^th Street Corridor Project head to the Goshen 9^th Street Corridor Project Page on DCI’s website.

Entertainment is an extremely important component to the contribution of activity and vibrancy in a downtown. The concentration of entertainment uses creates a definable sense of place that can act as an enormous draw for people, both locals and tourists. Restaurants, bars, and taverns attract more people when clustered in a definable area rather than on their own. Integration of uses such as cinemas, theaters, restaurants, and cafes encourages multiple consumption of entertainment themed businesses.

One of the consequences of retail and entertainment uses moving outside of central business districts was that after the working day was over, downtowns emptied as workers went home and the businesses supporting them closed. Entertainment businesses and attractions attract people, and therefore activity, to downtowns and neighborhoods during all hours of the day, particularly during the evening and nighttime hours. This brings a balance of activity to downtown, creating what has come to be termed a “24-7 downtown” – that is, a downtown with activity throughout a given day or week.

A component of central city revitalization has been the introduction of residents into downtown or neighborhoods near downtown.  Though people live in central city districts across the world, they had largely moved out of the American city center by the late 20^th century. Housing can be as essential a component of a downtown district as the office and retail sectors are. While it is true that downtowns can be successful and engaging places without a large residential population, downtown housing nevertheless assists the success of a downtown in several ways. It establishes a population that will always be present in the evening and nighttime hours, when office and retail workers have gone home. It also indicates people are willing to invest in the center city, not only those spending money to build or renovate housing, but those who are willing to call downtown home. Because downtown residents use their neighborhood as the place to shop and interact, they often spend more money in downtown retail than even the daytime population. The capability of downtowns to house large residential populations typically establishes a measure of safety that translates into a safer and more attractive environment for people who live outside of downtown to visit and engage in shopping or entertainment.

As residents begin to move into the central city, establishing and strengthening the entertainment sector of downtown becomes necessary.  Living in a densely built neighborhood like a downtown is inherently different from a suburban neighborhood. There is less parking and generally less housing space for residents, often at a higher cost. One of the major draws of living in a densely populated neighborhood like a downtown district is the ease with which one can access nearby amenities like shops, retail and entertainment. Indeed, for downtown residents, there is an expectation of being proximate to a variety of services and amenities. Indeed, without sufficient urban amenities like entertainment nearby, there would be little reason for people to choose to live downtown.

What is Entertainment?

Entertainment is generally that which amuses and pleases people. It is a broad term that is different for every person. Entertainment is an important contribution to quality of life. People typically have entertainments that appeal to them personally within the home, as well as entertainment that is generally shared throughout large groups.

Entertainment in the context of cities and neighborhoods relates to businesses and activities that supply customers with a commodity and experience intended for enjoyment, amusement, and/or social interaction. Urban entertainment venues provide a destination for people to enjoy themselves outside of their homes and workplaces.

Though many businesses associated with Entertainment can be thought of as “nightlife”, it is not meant to imply that all of these businesses and attractions must exist at night in order to be considered entertainment.

What is an Entertainment District?

An entertainment district is essentially an area or neighborhood within a city known for its numerous entertainment attractions. This usually does not apply to every neighborhood within a certain city that has a number of entertainment businesses, but one, possibly two, central area(s) that focus upon entertainment to draw customers and visitors. Some cities have such a focused area of entertainment, while many others have entertainment attractions spread throughout the city, leaving no one central area for entertainment.

Entertainment Districts today are often split into two categories; those that have evolved into entertainment destinations like Miami’s South Beach or The French Quarter in New Orleans, and those that have been actively planned and developed to be entertainment destinations, such as Baltimore’s Inner Harbor and Station North, Boston’s Faneuil Hall, and Toronto’s Entertainment District.

Much of the significance of an entertainment district lies in the perception of the area to visitors. South Beach, for example, is an area renowned for its numerous entertainment and nightlife destinations, and therefore can be considered an entertainment district. Baltimore’s Station North or Toronto’s Entertainment District on the other hand, are urban neighborhoods that have been planned, developed, and marketed as entertainment districts to attract new activity in those areas and inform visitors who might not necessarily have previous knowledge of those neighborhoods as entertainment destinations.

What is a Downtown Entertainment District?

As entertainment has become a more integral component in the revitalization of the urban core, the concept and practice of an entertainment district has evolved. Though the name should still evoke the presence of numerous entertainment opportunities, no longer can it only be applied to neighborhoods whose sole purpose is the provision of entertainment. Emerging downtowns in Boulder, Charlottesville, San Diego, and Portland, Maine can all be considered entertainment districts due to their concentration of entertainment related businesses, but all also have burgeoning office, retail, and housing sectors. These Downtown Entertainment Districts are effectively entertainment destinations, but exist to fulfill many other roles, those of a central business district, a major shopping district, and a residential neighborhood.

This distinction is especially important for small and medium sized cities, which rarely have neighborhoods considered entertainment districts in the same way they exist in larger cities. Small and medium sized cities differ from larger cities in that they have fewer areas containing concentrations of entertainment – usually two at the most. In many of these cities, the primary source for entertainment is located in the downtown district, or perhaps near a local college or university.

By strategizing for a Downtown Entertainment District, smaller cities can reap the benefits of an expanded entertainment sector in downtown neighborhoods without officially naming it as an “Entertainment District”, which for some, can have a negative association. As a revitalized downtown needs many different components to make it successful, a downtown entertainment district conveys an impression of a downtown with many entertainment destinations without the perception that the area’s  only attraction or purpose is entertainment, like many neighborhoods and entertainment districts in larger cities.

A Brief History of Urban Entertainment

Entertainment has always had a strong presence in the city, providing an essential element to the quality of life of both urban dwellers and visitors. Prior to the nineteenth century, entertainment establishments typically consisted of those catering to the upper class, those catering to the lower classes, and a few serving customers of all economic status. There were rarely established locations where entertainment was located, though establishments like taverns and drinking establishments were often clustered away from residential neighborhoods.

Several factors emerged in the 19^th and 20^th centuries that forever transformed urban entertainment and shaped how city dwellers interact with entertainment businesses today. The first was the emergence of downtown districts in the late 19^th century.  Formed at the height of the industrial revolution, downtown business districts were the central areas of commerce, transportation, and shopping for 19th century cities. Entertainment attractions began to cluster in downtown so as to take advantage of the synergies with the already existing shopping and employment sectors. By this time, people who could afford to had already moved out of the city center in favor of more spacious neighborhoods further away, often on the periphery of the city.

A second trend was the increase of per capita income and free time away from work between 1870 and 1930.¹ The growth in the buying power of city dwellers, as well as working hours beginning to be limited by federal legislation, led to a proliferation of establishments like theaters and restaurants, the introduction of new establishments with new technologies such as movie houses, and on a larger scale, the popularity of exhibitions, world fairs, sporting events, and amusement parks. Significantly, even though city residents in the early 20^th century were still segregated from one another by work, neighborhood, income, ethnicity, and social class, the locations of entertainment were increasingly becoming common areas shared by people of all classes and status.²

Another significant development was the establishment of incandescent lighting on city streets in the early 1900s.³ This dramatically increased the safety of pedestrians at night, helping make urban “nightlife” more accessible. New electric lights also increased the power of nighttime advertisement. Greater use of electricity provided fuel to streetcars, which made access to downtown faster and cheaper, and helped establish movie houses and cinemas, which by 1920 were rapidly supplanting theaters as the most popular urban entertainment.

Increased access to cheaper and more abundant land sparked a major population migration to the suburbs in the years following the Second World War.  This migration was aided by the automobile and the Federal Highway System, entertainment and employment soon followed. Many entertainment businesses remained in downtowns and urban neighborhoods, but an increased number were built outside of the city in the new population centers. The movement of entertainment businesses outside of downtown began in the 1920s, as cinema companies continuously opened up, eventually beginning to expand beyond downtown. By the start of the Great Depression, more movie theaters existed on the periphery of cities than were located downtown.

Today, the majority of development continues to be built on the periphery of cities. The dominance of suburban retail has become so firmly established that some entertainment businesses, such as cinemas, are generally thought of as suburban institutions. This is aided by the emergence of national chain corporations that develop key entertainment businesses such as restaurants, coffee shops as well as cinemas in suburban retail areas. As most of the population of the United States now lives in suburbs, much of the customer base for retail and entertainment services is in the suburban areas of the country.

However, this relocation of retail and entertainment has contributed greatly to the decline of the American downtowns as the place where most people work, shop, do business, and amuse themselves. Beginning in the 1980s, The United States saw a resurgent interest in downtowns and a movement for center city revitalization. There was a recognition that central cities and downtowns were integral to the quality of life and economic success of their communities, and cities sought to turn their decaying downtowns around before they became completely abandoned and irrelevant.

Part 2 of this series will discuss strategies to create a Downtown Entertainment District.

You can read Part 1 here, Part 2 here, and Part 3 here.

It is not uncommon to hear urban economic development experts discuss what it takes for an urban site to be competitive with “greenfield” sites. They often refer to this as trying to “level the playing field.”  This statement should serve as an accurate barometer of what the goal should be in engaging in redevelopment activity.  Due to economic decline and general neglect, a significant percentage of our urban real estate is not capable of attracting meaningful investment.  More importantly, the quality of life for those that live and work in these areas is absolutely unacceptable. Just as importantly, this real estate represents a lost opportunity to leverage investment for tax revenue.  Faced with undesirable land and risky development prospects, investment has continuously occurred in areas outside of urban cores, often outside of a core city entirely.

Reclaiming hundreds of acres of non-productive real estate needs a methodical approach, and many of the solutions are more common sense than rocket science. What is needed is a proactive, systematic, market based approach that focuses both the private sector and the public sector on creating an attractive real estate investment environment in designated redevelopment areas.  This is not a new concept.  Organizing around each of these five components identified in this paper make sense in pursuing a redevelopment strategy.

1. Assemble an In-House Redevelopment Team

There must be in-house expertise that understands the technical aspects of redevelopment laws.  They should also have good instincts when it comes to interacting with all the players – neighborhood, business, property owners, and professionals (legal, planners, financial consultants).  This team should be able to begin the process of assessing opportunities and exploring what is feasible and what is not. This team will provide advice and direction as it determines redevelopment opportunities and priorities.

2. Assemble External Experts

There are a host of community organizations with a wealth of experience regarding community redevelopment obstacles and opportunities. The collective knowledge of these organizations will help identify opportunities and lay the groundwork for community involvement and buy-in. Many of these “in the field experts” will serve as excellent resources as the redevelopment strategy is established and implemented.

3. Identify Key Redevelopment Tools

There should be some early understanding of the types of tools available to the public sector, the community, and the private sector in implementing future redevelopment strategies. Is a land bank an option to help with land assembly needs? If so, who is involved and how will it be operated? What involvement, if any, will tax abatement and tax increment finance (TIF) play? How will brownfields be addressed? Will the focus be on regulatory tools? Are there new programs that can empower other entities to become involved and part of the redevelopment process? Having the resources and tools to prepare an area for redevelopment is one of the most effective incentives encouraging new investment. Many of the tools should focus on this goal.

4. Set Outcome Thresholds for Prioritizing Redevelopment Areas

Assuming a “macro” approach will be used to establish a redevelopment area, what threshold requirements will be established in identifying the best opportunities for success? Are there prerequisites that should be placed on the impacted stakeholders to assure buy-in and participation? Will there be a requirement of property owner acceptance before moving forward with a redevelopment recommendation? Will there be measurements on benefits generated both in the redevelopment area and beyond? Are there private sector investment goals? There should be a number of key thresholds helping to prioritize when a redevelopment area is ready to receive the focused attention of the community.

The private sector will be critical to the success of any redevelopment strategy

5. Engage the Private Sector Early

The private sector will be critical to the success of any redevelopment strategy. A diverse group of private sector leaders should be consulted throughout the redevelopment process. Private sector leaders will bring business and financial expertise to the process. They will also be helpful in networking potential investment and investors as they gain a better understanding of what the opportunities are in each redevelopment area.

6. Appoint a “Clean-Up our Neighborhoods Task Force”

This task force will make recommendations on how to improve regulations and the regulatory process with a focus on the health and safety and code enforcement process. The task force ideally would be comprised of municipal legal experts and community stakeholder leadership. Outcomes that will shorten the time to effectively address the more severe property abuses will be identified and state and local legislative changes recommended.

You can read Part 1 here and Part 2 here.

Five key components are required for a successful redevelopment strategy

There are no easy answers to address the issues of neighborhood distress. A carefully crafted strategy, established with community stakeholders and public and private sector leadership, can make a difference. What will work on a larger scale, providing sustainable results, is likely to involve several critical components. The following components are essential building blocks to an effective and comprehensive redevelopment strategy.

1. Community Buy-In

Given the scope and magnitude of most urban economic distress, and assuming significant change is required to reverse this distress, it is absolutely necessary for community buy-in to be a part of any solution. A methodical process putting a well balanced “community team” in place to assist crafting the solution scope, soliciting and informing the stakeholders from the impacted area, and playing a role in implementation is mandatory to maximize support and minimize resistance to necessary change. Getting meaningful stakeholder involvement in a well thought out manner is an absolute essential if a macro redevelopment strategy is going to survive the planning process, let alone reach the implementation phase.

2. Land

A key assumption in any redevelopment program is that there is a large amount of land that is underperforming or not performing at all. Put in other words, the market is not investing in the real estate in any meaningful or productive manner. Most often this land is characterized by dilapidated buildings, brownfields, improper zoning, and cloudy title (ownership). It is often platted in a manner that does not accommodate the needs of a modern user or new development. Any successful redevelopment program must assume assembling and configuring land in distressed areas is imperative if an area is to once again entertain significant levels of new investment. It is important to understand the dynamics involved in unraveling the many entanglements inherent in analyzing, negotiating, and assembling urban “redevelopment” property are extremely complex. The process is much more involved than purchasing greenfield sites. Land acquisition to be accomplished in a reasonably efficient manner must incorporate a variety of skill sets in order to overcome the many obstacles involved in this important early step in the redevelopment process.

The Public Sector must minimize, if not remove, the risk of development in these areas in order for successful neighborhood redevelopment.

3. Incentives

The cost of doing business in an area considered distressed is often higher and can involve significantly more risk. Increased costs include, but are not limited to: security, insurance, legal due diligence, taxes, cost of construction, unforeseen property conditions, and sometimes parking for employees. Risks include, but are not limited to: marketability of the invested asset, ability to attract employees, customer/ visitor perceptions, potential for environmental liability, and failed infrastructure. In distressed areas the private sector is looking for a public sector partner. The partner must minimize, if not remove, the risk of development in these areas.
Perhaps the most important incentive provided by the public sector partner in a distressed area is a predictable and positive environment in which to invest. A guarantee of functional, well maintained infrastructure and unremitting vigilance in dealing with property maintenance and public safety begins to remove many of the redevelopment impediments. Land availability and its condition represent the other major factors likely to require public involvement if new investment is to occur. The ability to assemble land and prepare it for redevelopment (environmental remediation, rezoning, replatting) is not likely to occur on a measurable scale without some participation from the public sector. If an organization or public entity is not charged and empowered to complete the acquisition process, it is unlikely the real estate will be organized in a manner that fully addresses the needs of the community. This factor alone will impede the private sector from organizing its investment potential to create positive change in our urban areas.

4.  Investment

There are two key objectives when implementing a redevelopment strategy. The first involves eliminating slums, blight, or to modernize the legal redevelopment language – effectively removing the factors leading to disinvestment. The second objective, somewhat implicit in the first, is to create an enhanced environment for new investment. There are large pockets of urban areas that have lost value and are in steady decline. The goal is to reclaim their investment and development potential. Most developers/investors will need three factors to be present if they are to assume development risk:

1. The real estate must offer enough critical mass to make a difference. This is especially the case when the real estate is located in a redevelopment setting.
2. As mentioned earlier, the surrounding area needs to be predictable as to its future. If the environment around the subject real estate is perceived as a potential liability with an uncertain future, investors will take note and shun the opportunity.
3. The opportunity must be financially attractive. If the opportunity cannot be sold to debt and equity sources, the opportunity does not exist.

These factors: the real estate, surrounding environment, and ability to finance, must be conspicuously present in a redevelopment area if the development community is to invest and assume risk. Any macro redevelopment strategy must assume the ultimate outcome is the enhanced ability to attract large-scale new investment. It is appropriate to assume the public sector’s role is not to heavily subsidize the development, but to make sure a healthy environment exists in which to make development risk worthwhile.

5. Regulatory Muscle and Follow-Through

If you talk to stakeholders in areas considered distressed, they will normally express two frustrations. First, the laws and ordinances on the books addressing household and property maintenance and activity are often written without any real ability to enforce them (animal control, vehicle storage, drug peddling and solicitation, prostitution, unsafe buildings, etc). Too often, violations are found and reported, but a murky and overwhelming process is the result. This process is often lengthy, wearing down the complainant and the system prior to an adequate remedy from the system. A second frustration is the lack of consistent attention to code and criminal violations within their areas. Those easily enforceable laws still require enough trained personnel to follow-up and assure compliance (illegal dumping, high grass and weeds, abandoned building orders). There are areas within that do not receive regular attention from the enforcement agencies even though the need for such activity is undeniable. The system now rewards the squeaky wheel and other areas suffer as a result. The need for regularly scheduled, persistent follow-up with the chronic offenders is clear if enforcement is to be taken seriously. If minimum standards of property maintenance and use are not upheld through sufficient authority and enforcement, the ability to market distressed areas for investment is likely fighting a losing battle.

New homes at DCI's Martindale on the Monon project

While certainly challenging, urban residential development can be very rewarding. For several years now DCI has been doing residential redevelopment in the Martindale on the Monon neighborhood in Indianapolis.  So far we have built nearly 40 new homes for dozens of families and have helped to kick start the revitalization of a once forgotten neighborhood. In the process, we have gained some firsthand knowledge of the pitfalls to urban development. To assist anyone considering a similar endeavor, we thought it might be helpful to pass our insights along.

The Top 10 Urban Development Tips

1. My house is zoned what?

Make sure you know the zoning of individual parcels you have purchased in your neighborhood. Don’t assume that because you are developing in a residential neighborhood it was always zoned as such. This is especially true for neighborhoods near former commercial and industrial areas or adjacent to active or inactive rail lines. You may need to rezone these properties for a residential use before you can begin construction. Contact your local planning department for the rezoning procedures in your municipality.

2. Design Guidelines????

Many cities have some sort of residential infill design guidelines for new construction. Take the time to research these guidelines before you begin designing your homes. These guidelines may suggest or require specific amenities (such as porches), building massings, or architectural styles. It may be helpful to meet with the local planning staff regarding your home plans and these guidelines.

3. Remediation – Contamination’s expensive friend

Urban neighborhoods commonly have environmental issues that must be remediated before you can begin construction or rehabilitation. Older homes must be inspected for asbestos and lead-based paint, which most will have. Urban lots should be checked for soil contamination. You should especially watch out for lots near railroad tracks and former industrial uses (gas stations, dry cleaners, etc).

4. Not all appraisals are created equally

The market dynamics in redeveloping urban areas are much different than in more established neighborhoods and the suburbs. Work with you lender and request appraisers who are familiar with urban neighborhoods. If possible, educate your appraiser on your project and the efforts of others near your project. If your development is based on presale homes, provide comparables of homes in your project to the appraiser, since they won’t show up on the BLS. Your appraiser’s familiarity and experience with redeveloping urban areas can vastly affect the appraised value of your homes, which ultimately can affect the mortgage amounts your buyers can obtain.

5. Special Funding and Mortgages don’t always mix

Many urban infill housing projects are able to take advantage of grant funding and down payment assistance for their buyers. When working with these programs, it is important to make sure your buyer’s mortgage company accepts these programs. Not all mortgage companies are familiar with these grant funds and will require special approvals to utilize these programs.

6. Taxes, reassessments, and property values, oh my!

After purchasing property, be sure to pay special attention to your property tax bills. The boarded home that you own may have been occupied the last time property taxes were assessed and that vacant lot you just purchased may have had a structure on its last assessment. Don’t assume property tax assessments are always up to date. Although a very labor intensive time consuming process, requesting a reassessment can save you lots of money in the long run.

7. Lien on me

Don’t be surprised if old liens show up on your property after you have closed. Sometimes it can take several years for liens and unpaid utility bills to appear on a property tax bill. If these liens show up after you have purchased the property, you may be responsible to pay them before you can sell the property.

8. While you’re here to build houses, others see a dumping ground

Urban lots are often the first choice for people to dump their trash. While you may see a future home, others see a new place to unload their trash. Be sure to keep an eye on all of your lots. If possible, keep these lots well maintained and lit at night to increase visibility. Unfortunately this isn’t always enough. In some cases you may need to fence or block off properties until you are ready to build. This may sound expensive, but it is more affordable and less of a hassle than constantly clearing trash and garbage from your lots in order to stay out of Environmental Court.

9. Get to know your neighbors

Take the time to get to know the existing residents in the neighborhood where you plan to build; let them know your plans and seek their input. By involving them in your redevelopment, instead of keeping them in the dark, they are much more likely to support your efforts. While not all may greet you with open arms right away, an open line of communication can go a long way to ease neighborhood concerns.

10. Get to know your Not-for-profits too

When possible work with non-profits, neighborhood organizations, churches, CDC’s, and City officials.  Forming partnerships with these types of organizations allow you to do more for the neighborhood than you could do alone. Public-Private Partnerships have long been used to make tremendous improvements in our cities.

Do you have your own urban development tips? Share them with us in the comments.

Successful neighborhood redevelopment requires a broad macro approach.

This article is Part 2 of a four part series titled “Strategic Neighborhood Redevelopment.” This series provides the considerations involved in formulating a meaningful neighborhood redevelopment strategy. From Development Concepts Inc.’s 19 years of redevelopment experience, we’ll explain what is involved in establishing redevelopment strategies that produce sustainable private investment.

You can find Part 1 here.

Micro vs. Macro Responses

Given the impediments described in Part 1 of this series, it is surprising that there have been few comprehensive attempts to organize dysfunctional neighborhoods to better respond to the marketplace. One likely reason is the lack of an agreed-upon, systematic, “macro” approach to address the impediments and prepare distressed areas for market investment.

In many cities, the approach for neighborhood redevelopment has been predominately on a parcel-by-parcel basis.  Public sector and not-for-profits are the primary catalysts for change. Their mission, due to limited resources, has been to incrementally reinforce selected parcels of real estate. It is clear the pervasive impact of the impediments described in this section make a “micro” approach ineffective in creating a substantive impact able to capture the attention of the marketplace. While some good comes from a targeted reinforcement approach, it does not reset the real estate context in a manner that responds to today’s market requirements.It is clear a “macro” approach is necessary to engage America’s more distressed urban real estate. The marketplace and private investment must see opportunity in order to recapture its attention. Several small parcels or a few acres in the midst of disinvested property will not be an attractive investment opportunity for those private sector parties with the resources to make a difference. Nor will it be much of a catalyst for economic change given wide-spread disinvestment in the neighborhood.  Much like a surgeon removing disease from the body, a successful recovery depends on removing all, not just a significant portion of decay.

The marketplace and private investment must see opportunity in order to recapture its attention.

Waking up the Marketplace

As a redevelopment strategy is assembled, it is important to understand the importance of “reclaiming” the attention of the marketplace, as the market (in terms of private sector investment) generally prefers the path of least resistance. With this in mind, there are critical components of the redevelopment strategy that lead to successful implementation and outcomes.

The first part in the Planning stage is to develop a series of engaging, focused, and well researched goals for a community applicable at a local level. Such a set of goals, and the strategies which are developed to implement them, require three primary components of understanding. First, regardless of the size of geography, the involvement of the public is paramount throughout a planning process. The public is not only essential in providing key local information, but engaged citizens and stakeholders can greatly assist in sheparding redevelopment priorities forward. Second, an understanding of physical conditions assesses the local landscape in terms of the existing context of infrastructure, road network, and buildings. It also allows an understanding of the physical impediments that may be driving away the market. Third, both the public and private sector must have a thorough understanding of what development, building, and services are possible in the context of what the local or regional marketplace can support. Redevelopment projects initiated without full knowledge of what is possible via the market can be as damaging as doing nothing. From this Strategic Plan, the redevelopment strategy moves into an Implementation Phase. The key to this phase is a public-private partnership allowing a project to be successful. The public sector’s responsibility includes use of its “toolbox” to assist or initiate redevelopment activity, while the private sector is responsible for development outcomes such as physical construction and tenants.